THE MICROSOFT INVESTOR: How Long Can The Office And Windows Gravy Train Last?

MSFT Up Marginally In A Bouncing MarketThe market is fluctuating today: opening up on positive trading in Europe and Asia, then sliding to stabilize after yesterday's gains, and currently bouncing back up. Shares of MSFT up marginally. Upcoming catalysts include Steve Guggenheimer of Microsoft's OEM Division speaking at the JP Morgan Tech Forum at CES on Thursday, January 6; holiday quarter earnings results announced after the close on Thursday, January 27; entrance into the tablet market (to be announced at CES this week); Windows Phone 7 adoption; strides against current market leaders in cloud computing; and holiday sales of Kinect. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.

Office And Windows Are Tied To PC Sales, So How Do You Think That Market Will Fare?(The Motley Fool)How long can the Office and Windows gravy train last? Together, the two business lines contribute 92% of the company's operating profits. The cloud computing market or virtualization is tiny compared to Microsoft's $20 billion in earnings. If Microsoft started gaining gobs of market share in this segment under a best-case scenario, it probably wouldn't move the needle. Being able to predict how well PC sales hold on in the coming years will measure almost the entire worth of Microsoft. If you feel like you've got a good handle on that prediction, 90% of the legwork of investing in Microsoft is complete.

Microsoft Is A Top Investment Pick For 2011 (Investor Place)James Altucher's top pick for 2011 is none other than Microsoft. Given the run up in tech late in 2010, it's not surprising. But his rationale for Mr. Softie?

Stock buyback plan: Microsoft is currently working on a $40 billion stock repurchase.

Cash: Microsoft has $30 billion in the bank.

Bargain valuation: Microsoft trades for less than 8x next year’s earnings.

Kinect for Xbox: The Kinect video game controller is is bigger than people think.

Emerging markets: The developing world is opening up its wallet to corporate IT.

Microsoft hasn’t given investors a lot to be happy about lately, so maybe the time is right for the rotation of capital back into this old standard.

Microsoft Could Get As High As $30 Towards The End Of The Month (The Street)Traders are defensive with regard to tech stocks heading into 2011. One stock that might buck this trend? Microsoft. The stock rallied to a 6-month high at $28.40 about two weeks ago and pulled back in a bull flag pattern. Strong support at $27.50 should hold the decline and yield a renewed uptrend that eventually lifts price into $30 breaking that pattern.

Microsoft Plays Catch-Up In The Tablet Market (The New York Times)Steve Ballmer will get his do-over keynote at CES this year as Microsoft finally launches into the tablet market. Last year was supposed to be the year manufacturers would wow consumers with offerings of all sorts of tablet computers. Ballmer displayed three devices that he said would be on sale in the months ahead. Dozens of smaller companies laid out their own tablet plans at the show. But few of these promises came to fruition; none of Microsoft’s tablets ever showed up in stores. It's about time Steve.